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@SMCJB do you take positions for the following quarter then?
Isn't that a bit risky in CL considering it lacks seasonality?

Bulk of my positions are currently in the Dec15-Dec17 window although I do still have a smaller position in Nov15 which I'm currently liquidating and some odd lots past Dec17. I'm not sure I understand your question regarding risk and seasonality? (Are you implying seasonality makes commodities less risky?)

Bulk of my positions are currently in the Dec15-Dec17 window although I do still have a smaller position in Nov15 which I'm currently liquidating and some odd lots past Dec17. I'm not sure I understand your question regarding risk and seasonality? (Are you implying seasonality makes commodities less risky?)

Well what I meant is that I have read about Corn trading from Dec15 to Dec16 and Jul-Dec on other seasonal crops basically the common wisdom on spread patterns but I hadn't heard about sth similar with CL.
Very interesting, I'm a newbie on all this spreading stuff and futures in general. I appreciate the input. Thanks.

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Well what I meant is that I have read about Corn trading from Dec15 to Dec16 and Jul-Dec on other seasonal crops basically the common wisdom on spread patterns but I hadn't heard about sth similar with CL.
Very interesting, I'm a newbie on all this spreading stuff and futures in general. I appreciate the input. Thanks.

The way I think about it, there's seasonality that's caused by supply/demand imbalance and then there's seasonality caused by specification/product differences. I personally tend to think of them as two very different factors but of course they can be related and correlated

In energies when people talk about seasonality they often mean

Natural Gas - Demand>Supply in Winter, Supply>Demand most of the summer - Hence Winter trades at a premium to Summer.

Heating Oil - Same as NatGas. Demand>Supply in Winter, Supply>Demand in summer - Hence Winter trades at a premium to Summer.

A great example of that seasonality is the March/April spread in Natural Gas. If NatGas stocks are low going into a winter, March/April (aka "The Widow Maker") will scream to prices that seem completely unrealistic. If stocks are high, March/April drops to flat.

With regards to specification or product changes the most obvious in energies is

Gasoline/RBOB - RVP specs in the summer are more restrictive than the Winter, so the cost to make summer grade gasoline's is higher than winter grade.

While the examples above may seem obvious there are many less obvious examples. WTI when refined yields more Gasoline than Brent, and Brent yields more Heating Oil than WTI. Hence back in the days when Brent & WTI were both world Benchmarks, WTI traded at a higher premium in the summer than winter, because of the difference in product yields.

With regards to crops I believe what you referring to is what they call old crop/new crop but i'm not a Ags trader so I'll stick to energies.

The thing that would concern me about putting on any significant front end spread play currently is where the butterflys are trading. UVX is trading +27 as we speak, VXZ is trading -10 but then the next 5 flys are all around -6. That's a rather strange relationship and implies to me that something not normal is going on. Why is Sep/Oct worth 27 more than Oct/Nov when the market is apparently as weak as it is? But then Oct/Nov is worth 10 less than Nov/Dec which is maybe more what we would expect. When Sep expires, is the same dynamic suddenly going to apply to Oct/Nov, or is Sep actually holding Oct/Nov up and when it expires that spread plummets?

U.S. shale oil production amounted to just 5 million barrels per day (bpd) at the end of 2014, less than 6 percent of world production and consumption.

Despite the shale sector’s small market share, it has disrupted the entire oil industry because it emerged in the middle of the cost curve and has accounted for more than half of the increase in global supplies since 2010.

Between 2010 and 2014, shale output rose by 4 million bpd, accounting for more than half of the 7 million bpd increase in global liquids production over the same period, according to the U.S. Energy Information Administration (EIA).